Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (May 2004)
38 slides from Rheinmetall's investor presentation, May 2004
Slide 1: Rheinmetall presentation
Rheinmetall presentation May 2004 1
Slide 2: Rheinmetall continuing on track
At a glance Rheinmetall continuing on track Corporate restructuring program completed Earnings and performance achievements Automotive and Defence geared towards the future Prospects up to 2006 vkm-23-04-04 page 2
Slide 3: Corporate restructuring program completed
At a glance Rheinmetall continuing on track Corporate restructuring program completed !Structure simplified, performance improved !Focus on Automotive and Defence Earnings and performance achievements Automotive and Defence geared towards the future Prospects up to 2006 vkm-23-04-04 page 3
Slide 4: Rheinmetall at a glance
Rheinmetall 2004 Rheinmetall at a glance ! Founded in 1889 as a producer of gun ammunition ! More than a century experience in defence land systems ! Diversification in the 1980ies to civil industries, such as automotive, engineering, office furniture, electronics ! Beginning of 2000: new management
Slide 5: Balance sheet structure and free cash flow from operations improved
Corporate restructuring programs completed Balance sheet structure and free cash flow from operations improved Total equity / Free cash flow from operations stockholders' equity EUR million EUR million total equity stockholders' equity 869 98 93 691 717 731 659 675 (92%) 30 (76%) 463 450 (67%) (63%)
Slide 6: Financial debts and pension accruals further reduced
Corporate restructuring programs completed Financial debts and pension accruals further reduced Net financial debts Pension accruals 24% EUR million EUR million 1,004 Net adjusted debt ratio 17% 685 678 673 660 8% 530 7% 301 230 2000 2001 2002 2003 2000 2001 2002 2003 vkm-23-04-04 page 6
Slide 7: Research & development, Investments in fixed assets
Corporate restructuring programs completed Research & development Investments in fixed assets R & D-Expenses Investments in fixed assets EUR million/ % of sales 6.2% 4.7% 5.8% 4.3% 4.5% 5.4% 4.3% 284 212 207 265 4.8% 248 197 183 203 2000 2001 2002 2003 2000 2001 2002 2003 vkm-23-04-04 page 7
Slide 8: Profitability enhanced: Returns clearly improved
Corporate restructuring programs completed Profitability enhanced: Returns clearly improved Adjusted EBIT margin in % Adjusted ROCE in % 13.4 5.2 10.9 4.7 4.2 8.6 2.3 4.3 2000 2001 2002 2003 2000 2001 2002 2003 vkm-23-04-04 page 8
Slide 9: Earnings and performance achievements
At a glance Rheinmetall continuing on track Corporate restructuring program completed Earnings and performance achievements !Successful business year 2003 !Good start into the new business year 2004 Automotive and Defence geared towards the future Prospects up to 2006 vkm-23-04-04 page 9
Slide 10: Automotive and Defence outpacing their industries
Consolidated financial statements Automotive and Defence outpacing their industries Car production +7.1% -0.8% -3.0% 18.4 19.7 16.9 16.8 16.4 15.9 Car production worldwide: 1.6% Organic growth 2002 2003 2002 2003 2002 2003 Kolbenschmidt Pierburg: >4% Source: VDA W. Europe NAFTA Asia Defence spending
Slide 11: Stable order situation
Consolidated financial statements Stable order situation Book-to-bill ratio stable since 2000 Order intake Order backlog Book to bill ratio (accumulated) EUR million EUR million 4,840 4,165 700 580 4,300 * 430 4,128 3,300 * 3,143 2002 2003 2002 2003 2000 2001 2002 2003 *adjusted for consolidation gr
Slide 12: Key data (year-on-year comparison)
Consolidated financial statements Key data (year-on-year comparison) EUR million 2001 2002 2003 Sales Rheinmetall Group 4,603 4,571 4,248 Automotive 1,826 1,883 1,884 Defence 1,614 1,677 1,605 Other/consolidation 1,163 1,011 759 Order intake 5,033 4,840 4,128 Order backlog 4,113 4,165 3,143 Employee
Slide 13: First Quarter 2004: good start into the new business year
Consolidated financial statements First Quarter 2004: good start into the new business year EUR million January - January - March 2003 March 2004 Sales Rheinmetall Group 1,018 821 Automotive 495 495 Defence 300 243 Other/consolidation 223 83 Order intake 1,095 884 Order backlog 4,471 3,076 Employees
Slide 14: Key data - income statement
Consolidated financial statements Key data - income statement (year-on-year comparison) EUR million 2001 2002 2003 EBITDA 468 701 446 EBIT 195 392 204 Adjusted EBIT (operative) 192 213 223 Net interest expense (111) (102) (84) EBT 84 290 120 Income taxes (46) (16) (52) Group earnings 38 274 68 Minor
Slide 15: Results from operations up by 5%
Consolidated financial statements Results from operations up by 5%; Like-for-like operative EBIT improved by EUR 42 mill. Adjusted EBIT margin climbed from 4.7% to 5.2% EUR million 2002 2003 EBIT 392 204 Nonrecurring losses/gains from shareholdings (219) (26) realty 5 (7) restructuring 35 52 Adjuste
Slide 16: First Quarter 2004: clear improvement of earnings in spite of lower sales
Consolidated financial statements First Quarter 2004: clear improvement of earnings inspite of lower sales EUR million January - January- March 2003 March 2004 EBIT Rheinmetall group 22 32 Automotive 22 40 Defence -12 -10 Other/consolidation 12 2 EBIT-margin group (in%) 2,2 3,9 EBT group 3 14 Group
Slide 17: Performance of preferred stock
Consolidated financial statements Performance of preferred stock Adjusted earnings per preferred share before goodwill amortization increased by 56% from EUR 1.83 to EUR 2.85 2001 2002 2003 in EUR EpS after goodwill amortization 0.62 6.87 1.78 EpS before goodwill amortization 1.09 7.95 2.62 Adjusted
Slide 18: Automotive and Defence geared towards the future
At a glance Rheinmetall continuing on track Corporate restructuring program completed Earnings and performance achievements Automotive and Defence geared towards the future !Automotive products benefited by market trends !Market leadership in the European army business Prospects up to 2006 vkm-23-04
Slide 19: Target structure achieved at the start of 2004: Focus on Automotive and Defence
Automotive and Defence geared towards the future Target structure achieved at the start of 2004: Focus on Automotive and Defence 95.5% Rheinmetall AG 100% AUTOMOTIVE DEFENCE Innovative engine components Land forces technology Kolbenschmidt Pierburg AG Rheinmetall DeTec AG Share of group sales: about
Slide 20: Five divisions focused on engine components
Rheinmetall Automotive Five divisions focused on engine components Kolbenschmidt Pierburg AG Sales: EUR 1.9 billion Employees: 11,300 Pierburg KS Pistons KS Plain KS Aluminum Motor Service Bearings Technology Air supply, emission Large- & small-bore Plain bearings & Engine blocks Aftermarket control
Slide 21: Kolbenschmidt Pierburg Successes in 2003
Rheinmetall Automotive Kolbenschmidt Pierburg Successes in 2003 ! Asian business base broadened: Acquisition of Mazda piston production, China JV topped up ! Strenghtening aftermarket business in Germany: Takeover of Trost's engine parts business ! Aluminium Technologie (ATAG) turnaround in Q4/2003
Slide 22: Kolbenschmidt Pierburg indicators
Rheinmetall Automotive Kolbenschmidt Pierburg indicators 2002 2003 Change EUR million Sales 1,883 1,884 0% thereof outside Germany 67% 68% EBIT 97 103 +6.2% Adjusted EBIT 102 114 +11.8% Adjusted EBIT margin in % 5.4 6,1 +13.0% Adjusted ROCE in % 12.3 15.2 +23.6% vkm-23-04-04 page 22
Slide 23: Broad customer base: Sales by OEM and by region
Rheinmetall Automotive Broad customer base: Sales by OEM and by region Sales by OEM General Other Motors/FIAT 17% 21% Aftermarket Volkswagen 8% 12% 2002 2% Cummins 3% 10% International 4% 7% 8% Ford PSA 8% BMW Daimler Chrysler Reanault / Nissan vkm-23-04-04 page 23
Slide 24: Growth driven by innovation
Rheinmetall Automotive Growth driven by innovation Automotive innovations Market developments Diesel trend !Percentage of new diesel cars in Europe still rising; potential in the US !Diesel engines require more complex engineering for pistons, bearings and engine blocks Lightweight Diesel Trend to m
Slide 25: Growth driven by internationalization
Rheinmetall Automotive Growth driven by internationalization Export percentage Chances 66,5% 68% 66% 66% !Max. exploitation of capacities in Japan !Expansion of Chinese activities 61% 59% !Pierburg products for the US market !Production facilities in Eastern Europe 1998 1999 2000 2001 2002 2003 Expo
Slide 26: Four divisions focused on ground forces technology
Rheinmetall Defence Four divisions focused on ground forces technology Rheinmetall DeTec AG Sales: EUR 1.6 billion, Employees: 7,400 Rheinmetall Oerlikon Contraves Rheinmetall Rheinmetall Landsysteme Weapon & Ammunition Defence Electronics Land Systems Air Defence Systems Weapon & Ammunition Defence
Slide 27: Successes in 2003
Rheinmetall Defence Successes in 2003 ! Concentration on land forces capabilities now complete: Naval Systems transferred, Heidel/Nico-fireworks sold in 2004 ! Major projects for armed forces transformation addressed: e.g. Puma, armored transport vehicles, army information systems, drones ! Major ex
Slide 28: Rheinmetall DeTec indicators
Rheinmetall Defence Rheinmetall DeTec indicators MioEUR 2002 2003 Change Sales 1,677 1,605 -4.3% thereof outside Germany 56% 57% EBIT 72 69 -4.2% Adjusted EBIT 80 92 +15.0% Adjusted EBIT margin in % 4.8 5.7 +18.8% Adjusted ROCE in % 13.7 17.4 +27.0% vkm-23-04-04 page 28
Slide 29: Growth driven by innovation
Rheinmetall Defence Growth driven by innovation Defence innovations Requirements Out of area operations !Priority on protection of soldiers !Air transportability requires light equipment Changing needs Mobility (Property) protection !Weapons of mass destruction require detection devices Innovations
Slide 30: Growth driven by internationalization
Rheinmetall Defence Growth driven by internationalization Export percentage Chances 56% 57% !Step up strategic alliances worldwide 48% 44% !International marketing of protection 39% systems, NBC reconnaissance, air defence 1999 2000 2001 2002 2003 !Accelerated efforts in the new NATO countries and t
Slide 31: Prospects up to 2006
At a glance Rheinmetall continuing on track Corporate restructuring program completed Earnings and performance achievements Automotive and Defence geared towards the future Prospects up to 2006 !Organic growth will continue !Profitability and margin targets will be achieved vkm-23-04-04 page 31
Slide 32: Growth driven by innovation and internationalization
Prospects Growth driven by innovation and internationalization !Average annual organic growth for the Group: 5% 4,248 3,800 EUR million 3,700 3,500 3,300 Defence +7% p.a. Automotive +4% p.a. Divestments 2003 Defence Automotive 2003 2004e 2005e 2006e !Calculated investments back on agenda vkm-23-04-0
Slide 33: Higher EBIT margin will increase shareholder value
Prospects Higher EBIT margin will increase shareholder value EBIT margin in % Target of 7 % will be achieved by: 7,0% ! Organic growth 5,2% ! Improved productivity ! Sustainable gains from restructuring efforts ! Improvement of underperforming business units 2003 2006 vkm-23-04-04 page 33
Slide 34: Higher ROCE will increase shareholder value
Prospects Higher ROCE will increase shareholder value ROCE in % Target of 15 % will be achieved by: ! Optimized working capital 15,0% 13,4% ! More efficient capacity utilization ! Stabilization of capex-rate ! ROCE is already above weighted average cost of capital 2003 2006 vkm-23-04-04 page 34
Slide 35: Important steps and activities in the first quarter of 2004
Prospects Important steps and activities in the first quarter of 2004 Desinvestments completed " Sale of Hirschmann Electronics GmbH to Hg Capital " Disposal of Heidel group (Defence) " Disposal of the civil pyrotechnics-activities of the Nico group " Shedding of majority stake in Danish EuroCom Ind
Slide 36: The core constituents of Rheinmetall's future growth strategy
Prospects The core constituents of Rheinmetall's future growth strategy Added market share Organic growth has priority ! Continue the year-earlier organic growth rates (+5% annually) ! Occupy dynamic market segments (e.g. diesel, emission, armed forces transformation) ! Maximize added market potenti
Slide 37: Rheinmetall shows confidence for 2004: targets are achievable
Prospects Rheinmetall shows confidence for 2004: targets are achievable Total sales of EUR 3,5 billion Organic growth of more than 5% with a workforce of 18.000 Improvement of EBIT-margin All operating business units generate profits Further reduction of net debt and interest expenses Capex will rem
Slide 38: Disclaimer
Rheinmetall AG Disclaimer Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Any forward looking statement contained in this presentation represent our best judgement as to wh